In recent years, financial institutions have developed various type of financing transactions to provide funds in exchange for different forms of collateral. A popular and growing type of such transactions is Whole Loan Funding, in which customers (which may be individuals, banks, etc.) pledge as collateral or sell whole loans to a lending institution (such as Merrill Lynch) in return for funds. The whole loans often consists of various mortgage obligations which have not been securitized. Through these transactions, customers can quickly convert their mortgage loan assets into liquid assets with minimal transaction costs. A number of transactions take place under the umbrella term "Whole Loan Funding" as is obvious to those skilled in the art. Some of the particular types of transactions will be discussed in the Detailed Description below.
Whole Loan Funding transactions are now conducted largely through paper operations. Loan applications were telecopied, hand-delivered or phoned and transcribed to officers in the lending institutions who would manually check the customer's creditworthiness, trade history and current loan parameters. Decisions were then made as to the discount rate applied to the collateral (the "haircut") and the total funds the lending institution is willing to supply the customer. Confirmations with proposed loan amounts would then be sent (via telecopier, courier, phone, etc.) to the customer for consideration/acceptance. Officers would then process the trade manually, including issuing the necessary funds transfer advices (also initially through a paper authorization) to the lending institution's cash bank and the custodian bank holding the pledged assets.
From the lending institution's point of view, information is critical to the success of a Whole Loan Funding program. Customer's trade histories, the daily status of existing accounts, the value and performance of pledged assets, and updates to the profit/loss of individual accounts as well as various aggregates of this data are just a few examples of types of information that can assist officers in approving loans and also assist the institution in maintaining a profitable program. Given the volume of trades that take place daily and therefore, the volume of paper, it is a practical impossibility to manually organize and then cull and collate information on any large scale. It is also time consuming, if not difficult, for customers to obtain information relating to their trades, as the information must be manually retrieved and relayed to the customer by an Operations Officer.
Existing computer systems and software, such as commercial spreadsheet programs, have eased the labor burden of the Whole Loan Funding program somewhat, although only as it relates to the internal workings of the lending institution. Some information relating to various trades and loans can be entered into spreadsheets that will perform calculations, such as interest calculations, and retain some information relating to customers' transactions, such as the total funds transferred and the amount of collateral pledged. However, such systems do nothing to alleviate the burden placed on customers and officers in communicating and consummating transactions or in providing customers with valuable information relating to their transactions.